Experts: USDA Report Adds Pressure on Bevs

They’ve cut sugary drinks out of schools. They’re introducing lower-calorie products and natural sweeteners. They’re giving money to fitness programs. But here it goes again: a new report published by the United States Department of Agriculture (USDA) says that consuming carbonated soft drinks contributes to America’s obesity problem.

This report, from the Agency’s Economic Research Unit, suggests that a beverage tax might be a way of correcting the problem, positing that a 20 percent tax on sweetened beverages could prompt Americans to cut back on drinks containing added sugars, thus “saving” consumers approximately 38 calories per day – a deficiency that would translate to an average weight reduction of 3.8 pounds per year in adults.

While keeping Americans healthy is all well and good, doesn’t such a USDA-endorsed report present a symbolic slap in the face for the beverage industry? Or even worse, can’t the economic argument it presents serve as the potential basis for a new wave of attempts to tax the industry further?

It can, according to Justin J. Prochnow, a Denver, Colorado-based lawyer with Greenberg, Traurig, LLC. who added that the impact could be significant even if the research doesn’t really reveal anything new.

“I don’t know that anything coming out of this [report] was earth-shatteringly different than what’s been coming out over the last couple of years,” he said. “I think it’s just another example of the trend in which everything’s been going – in the beverage industry the obesity issue is a big issue.”

But if you ask your insurance company, your local doctor, even some beverage marketers, they’ll say that there are real health problems associated with rapidly expanding waistlines – and that, as with stop-smoking efforts, creating a short-term fiscal incentive to change consumer behavior can have long-term effects when it comes to medical bills.

So the question is, if the report doesn’t reveal anything new about the health effects of obesity, does the suggestion from the USDA – the body that regulates much of the country’s food supply – that a tax could be a game-changer have extra significance?

Quite possibly, says Jason Block M.D., an Instructor with the Department of Population Medicine at Harvard Medical School and Harvard Pilgrim Health Care Institute. Block considers a tax a step in the right direction.

“A tax has promise. Much of what has been investigated for years as strategies to alter the rise of obesity rates hasn’t really altered the effect,” Block said. “We’ve invested a lot of time, money and energy into obesity prevention. Thinking of large-scale policy changes like taxes are where we need to put some of our energy.”

However, he cautions that a tax on soda won’t be the solution to America’s obesity concerns. “A soda tax is no magic bullet – the number of calories that would be reduced [if people stop drinking sodas] is small and that’s what the report shows clearly.”

Nevertheless, Block added, “that small reduction is important in the long run.”

To its credit, the beverage industry has been introducing ways to encourage younger consumers to select healthier alternatives to sugary sodas. In particular, the American Beverage Association’s Clear on Calories program has reduced full-calorie soda shipments to schools by 95 percent. The program also prompted an 88 percent decrease in total calories contained in all beverages shipped to schools.

However, if the beverage industry wants to fight product-related taxes, like the recently proposed – and failed – New York beverage tax, they’ll need to step up their efforts, because the next wave is likely coming, fueled by studies like the USDA’s.

“Beverages have taken a kind of unfair rap for obesity,” he explained, “And it’s clear that changes have to be made. Providing more information is one way to help people make better choices – and it’s what America’s all about.”

While Prochnow maintains that it’s not the government’s responsibility to tell people what to drink, he does believe that beverage companies need to change – or face future tax threats. “Labeling is something that the FTC and the FDA are going to be taking a closer look at [in the future],” he explains.

Meanwhile, if companies continue to work on healthy initiatives akin to Clear on Calories, it may be the case that there is no need for beverage taxes at all.

“The best thing that the beverage companies can do in these types of environments is to show that these taxes aren’t needed because the industry is taking their own steps to address these issues,” Prochnow said. They can communicate “we are changing these products; we are educating people more, so no one can claim that beverage companies are pulling the wool over people’s eyes.”